Smith v. USAA Cas. Ins. Co.

• Decision Date: 14 June 1990
• Docket Number: No. 90-C-0129,90-C-0129
• Citation: 563 So.2d 572
• Parties: Mary Margaret SMITH, et al. v. USAA CASUALTY INSURANCE CO., et al.
• Court: Court of Appeal of Louisiana — District of US

Page 572

563 So.2d 572

Mary Margaret SMITH, et al. v. USAA CASUALTY INSURANCE CO., et al.

No. 90-C-0129.

Court of Appeal of Louisiana, Fourth Circuit.

June 14, 1990.

Raymon G. Jones, Jaime C. Waters, Deutsch, Kerrigan & Stiles, New Orleans, for appellant.

Timothy G. Schafer, Schafer & Schafer, New Orleans, for appellee.

Before BYRNES, CIACCIO and WILLIAMS, JJ.

CIACCIO, Judge.

We granted certiorari in this case following the trial judge's overruling of defendant's peremptory exceptions and denial of defendant's motion for summary judgment. For the reasons set forth, we reverse the judgment of the trial court.

This action arises out of a single accident involving two vehicles in which three minors were seriously injured. On March 23, 1985, Hillary Smith, Kendra Sutton and Elizabeth Shore were visiting a hunting lodge in St. Francisville, Louisiana and were operating two Honda four wheel vehicles which were owned by Mr. and Mrs. George Woodside. This accident occurred when the two vehicles in which the minors were riding collided. Three suits were then brought on behalf of these minors against the Woodsides, their homeowner's insurer, USAA Casualty Company (hereinafter USAA), and Continental Casualty Company (hereinafter CNA), the Woodsides personal umbrella excess carrier. Plaintiffs alleged in their petitions that the Woodsides were liable for their injuries because of their negligent supervision of the minors in the operation of these vehicles. USAA refused to defend the Woodsides under their homeowner's policy, based a clause in the policy which excluded coverage for accidents involving recreational vehicles.

Because of a clause in the excess policy which provides that coverage by CNA would drop down to the first dollar amount if primary insurance failed, CNA was called in to defend the Woodsides. The Woodsides and CNA then sued USAA seeking a declaratory judgment as to whether the Woodsides were afforded coverage under USAA's homeowner's policy. The trial court ruled that the USAA policy provided coverage, and USAA appealed to this court. In Smith v. USAA Cas. Ins. Co., 532 So.2d 1171 (La.App. 4th Cir.1988), this Court affirmed the judgment of the trial court and ordered that USAA had a duty to defend the Woodsides in this matter, because the exclusion in USAA's policy only applied to the use of recreational vehicles, and not to the negligent supervision of the operators of said vehicles as alleged by plaintiff.

Prior to the trial of this matter, USAA and other insurers entered into a settlement agreement with plaintiffs in which plaintiffs released their claims against the Woodsides and USAA and other defendants and insurers. The settlement amount paid by USAA was within its policy limits. CNA contributed nothing to the settlement and CNA was not given a release by the plaintiffs. However, CNA did consent to the judgment of homologation dated November 2, 1989 which contains the following language:

The foregoing counsel advised the Court that an agreement of settlement and compromise has been reached between all parties for all claims and causes of action arising from and/or associated with the accident which occurred and the injuries sustained on March 23, 1985, with the exception of a coverage dispute between USAA Casualty Company and Continental Casualty Company, all rights under which have been reserved and the said dispute will be submitted to the Court for resolution.

Under the said agreement of settlement and compromise:

* * * * * *

(4) The dispute between USAA Casualty Company and Continental Casualty Company as to whether the USAA policy provides coverage for Mr. and Mrs. George Woodside under the facts of this case, thereby affecting USAA's right to be reimbursed for the aforesaid settlement sums paid by it, shall be submitted to the Court for resolution.

Following the execution of this settlement agreement, USAA sought to have a trial by jury to determine whether the Woodsides negligently supervised the minors so as to afford them coverage under the primary policy, or whether the exclusion applied, making CNA's policy applicable. CNA filed peremptory exceptions of no cause or right of action, res judicata and alternatively, a motion for summary judgment, arguing that USAA settled the claim with plaintiffs for within the primary policy limits, and that therefore USAA has no claim against CNA.

The trial court overruled CNA's exceptions and denied the motion for summary judgment. In...